Only est. 5% of investors borrow money in order to invest.
Overall less than half (46%) of all investment portfolios are diversified to lessen financial risk.
Currently, most investors in Australia are self-directed, choosing to conduct their own research.
[See https://www.asx.com.au/documents/resources/2017-asx-investor-study.pdf
& http://www.abs.gov.au/ausstats/abs@.nsf/mf/6238.0]
Excess Franking Credits derived from Share Dividends
Social media opinion
A terrific example of the irrational, ill-considered investment "strategy" that the imputation tax rort encourages. People invest on the basis of the rort with no consideration of underlying corporate fundamentals https://t.co/6mswyubE0E— Stephen Koukoulas (@TheKouk) March 15, 2018
Case Study 1
Case Study 2 - Stjepan has retired with what appears to be a self-managed super fund. As his fund is in the pension phase he pays $0 tax. He and his wife have a combined annual income of $89,000 and own shares valued at $200,000. He states that he will lose "several thousand dollars a year" if he no longer receives cash back for excess franking credits.
Stepan owns his own home plus a holiday unit.
If this couple's combined income is $89,000 then they would possibly have income producing assets valued at around $1.7 million.
Case Study 3 - "Peter" has a self-managed super fund. As his fund is in pension phase he pays $0 tax. Peter has an income of $60,000 a year. Dividends from his share portfolio see him receiving franking credit cashback payments of over est. $8,000 per annum which he lodges in his SMSF account to grow his balance.
His income producing assets are possibly valued at est. $1.2 million.
Case Study 4 - Margaret and her husband have a self-managed super fund. As their fund is in the pension phase they pay $0 tax. The SMSF appears to solely invest is shares - 85% of which are Telstra and big bank shares.
Currently National Australia Bank shares are worth in the vicinity of $29.51 with an annual dividend yield of 6.71%, Westpac shares are worth in the vicinity of $29.52 with an annual dividend yield of 6.37%, Commonwealth Bank shares are worth in the vicinity of $75.34 with an annual dividend yield of 5.71% and, Telstra shares are worth in the vicinity of $3.35 with an annual dividend yield of 6.8%.
No income is stated but what is asserted is that the abolition of payment for excess franking credits will see their annual income reduced by 30%.
Margaret and her husband own their own waterfront residence in Sydney.
The bottom line is that investors who structured their portfolios to take maximum advantage of excess franking credit cash payments do not appear to have considered the relatively short history of this cash payment scheme or the possibility that a political push might occur to eliminate the 'value' of unused franking credits - given that current owners of these credits who had no tax liability were claiming refunds for tax they had never paid in the first place.
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